Snatching Defeat from the Jaws of Victory - Neurim Pharmaceuticals v Mylan

Ebenezer Scrooge and Marley's Ghost

Jane Lambert

Patents Court (Mr Justice Matcus Smith) Neurim Pharmaceuticals (1991) Ltd and Another v Generics UK Ltd (t/a Mylan) and another  [2021] EWHC 530 (Pat) (12 March 2021)

This was an action by Neurim Pharmaceuticals (1991) Ltd ("Neurim") the proprietor of European patent (UK) 1 441 702 B1  and Flynn Pharma Ltd ("Flynn"), its purported exclusive licensee, to restrain the infringement of that patent by Generics UK Ltd. and Mylan UK Healthcare Ltd. There was also a counterclaim by the defendants (referred to jointly as "Mylan") for the revocation of the patent on grounds of anticipation, obviousness and insufficiency.  This action and counterclaim came on for trial before Mr Justice Marcus Smith between 29 Oct and 5 Nov 2020. 

At first, Neurim was victorious.   By para [148] of his judgment in Neurim Pharmaceuticals (1991) Ltd and another v Generics UK Ltd and another [2020] EWHC 3270 which he delivered on 4 Dec 2020, his lordship held that the patent was valid and infringed.  The only setback for the claimants was that Flynn was found not to be Neurim's exclusive licensee.   On 16 Dec 2020, the judge made an order declaring the patent to be valid and infringed and injuncting Mylan from infringing the patent.  He also gave Flynn permission to appeal against his finding that it was not Neurim's exclusive licensee.

Neurim's triumph was short-lived.  Just 2 days later, the European Patent Office ("EPO") revoked the patent in the UK and all the other countries in which EP 1,441,702B had been granted pursuant to art 101 (2) of the European Patent Convention ("EPC").  A further hearing was held on 30 Dec 2020 to consider the revocation.   At that hearing, Mr Justice Marcus Smith revoked his order in favour of Neurim of 16 Dec 2021. He directed yet another hearing to consider the consequences on 22 Feb 2021.  

In a reserved judgment handed down on 12 March 2021, the learned judge upheld his decision to revoke the order of 16 Dec 2020. He awarded Mylan the costs of and arising out of those proceedings including the costs of the hearings of 16 and 30 Dec 2020 (see Neurim Pharmaceuticals (1991) Ltd and another v Generics UK Ltd (t/a Mylan) and another [2021] EWHC 530 (Pat) (12 March 2021)). He also revoked the permission to appeal that he had granted to Flynn on 16 Dec 2020. 

How the Patent came to be revoked

Art 99 (1) EPC provides:

"Within nine months of the publication of the mention of the grant of the European patent in the European Patent Bulletin, any person may give notice to the European Patent Office of opposition to that patent, in accordance with the Implementing Regulations. Notice of opposition shall not be deemed to have been filed until the opposition fee has been paid."

An opposition is considered not by a tribunal but by an Opposition Division consisting of three technically qualified examiners, at least two of whom shall not have taken part in the proceedings for grant of the patent to which the opposition relates (see art 19 (2) EPC). The grounds upon which a patent may be opposed are set out in art 100:

"(a) the subject-matter of the European patent is not patentable under Articles 52 to 57;
(b) the European patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art;
(c) the subject-matter of the European patent extends beyond the content of the application as filed, or, if the patent was granted on a divisional application or on a new application filed under Article 61, beyond the content of the earlier application as filed."

Art 102 (2) EPC requires the Opposition Division to revoke a patent if the Division is of opinion that at least one ground for opposition prejudices the maintenance of the European patent.   It does not have to consider any other grounds.  A patent that is revoked in opposition proceedings is revoked in all the countries for which it was granted.  

In this case, the Opposition Division found that the patent was invalid for want of novelty.   Neurim appealed against the decision to a tribunal known as "The Technical Board of Appeal".  Art 21 (4)  EPC states that for appeals from a decision of an Opposition Division, a Board of Appeal shall consist of:

"(a) two technically qualified members and one legally qualified member, when the decision was taken by an Opposition Division consisting of three members;
(b) three technically and two legally qualified members, when the decision was taken by an Opposition Division consisting of four members, or when the Board of Appeal considers that the nature of the appeal so requires."

The revocation of a patent by the Opposition Division is suspended while an appeal is pending.  If the appeal fails or is withdrawn the suspension of the Opposition Division's decision ends and the revocation takes effect immediately.  The patent is treated as though it had never existed.  

The Board heard the appeal on 17 Dec 2020.  On 18 Dec, it indicated that it was minded to find that the patent was invalid for insufficiency and offered Neurim an opportunity to withdraw its appeal.  A party that withdraws an appeal is entitled to recover part of its appeal fee.  Neurim took advantage of the opportunity.  As soon as it did so, the patent ceased to exist.  

Did the Court have jurisdiction to revoke its Order of 16 Dec 2020?

Mr Justice Marcus Smith noted that the power to make an order under CPR 3.1 (7) includes a power to vary or revoke the order.  He also noted that the rule that a "judgment or order takes effect from the day when it is given or made, or such later date as the court may specify" under CPR 40.7 had always entitled a judge to vary or even revoke his or her order before it had been perfected.  He reviewed the cases on the issue.   The judge found that CPR 3.1 (7) conferred jurisdiction to vary or revoke an order but such jurisdiction has to be exercised sparingly and in very special circumstances.

The claimants submitted that the order of 16 Dec 2020 should stand.  They contended that the order had been made after a final judgment, that it operated perfectly well on its own terms, and that the subset provision in the injunction anticipated the possibility that the appeal to the Technical Board might fail.   The order was final and not interlocutory. The usual justifications for varying an order such as a mistake in drawing up or expressing the order or a material change of circumstance were absent.  Mylan argued that this was an exceptional case even amongst exceptional cases. His lordship agreed with Mylan.  His lordship concluded that he should exercise his jurisdiction to revoke the order of 16 Dec on the very special facts of the case.

Costs

As costs normally follow the event pursuant to CPR 44.2 (2) (a), the judge had to consider who was the winner and whether there were any circumstances that might justify another order.  Neurim contended that it has been successful in the English proceedings up to 30 Dec 2020 that it should keep its costs.  Mylan argued that the outcome of the proceedings was that the patent had been revoked and the injunction dissolved.   Neurim also argued that generic pharmaceutical manufacturers who want to challenge a patent should clear the way with revocation proceedings under s.72 of the Patents Act 1977 or a declaration of non-infringement under s.71 rather than opposition proceedings in the EPO under art 99 EPC.  The judge found that Mylan was the winner of the proceedings and that there were no circumstances to justify a different order.

Revocation of Flynn's Permission to Appeal

Although Mr Justice Marcus Smith had held that was Flynn was not Neurim's exclusive licensee he had not found it an easy point to decide.   For that reason, he gave that Flynn permission to appeal on 16 Dec 2020.  The revocation of the patent had rendered the issue of whether it was Neurim's exclusive licensee hypothetical.   As there was no longer any point in considering the issue, the judge revoked the permission to appeal that he had granted on 16 Dec 2020.

Comment

The last two weeks of December cannot have been very festive for Neurim and Flynn but they could not have anticipated the suddenness or the completeness of the reversal of their fortunes as a result of the orders of 30 Dec 2020 and 12 March 2021.  They or at least Neurim had won on all the issues that had been before the court. To deprive Neurim of the fruits of its action and, above all, its costs must have been as welcome as leftover turkey and stale mince pies.  If Mr Justice Marcus Smith's analysis is correct, he was not bound to revoke his order of 16 Dec 2020.  It was not clear until his judgment of 12 March 2021 that he even had jurisdiction to revoke his order of 16 Dec 2020 and he was not bound to exercise it in the way that he did or at all.  However, if the order of 12 March was an exercise of judicial discretion it will not be easy to appeal.

Another interesting aspect of this case is that a High Court judgment was overturned - or perhaps more correctly undermined - not by a higher court or even by the Technical Board of Appeal but by the examiners of the Opposition Division.   Examiners are not judges but civil servants or, as some would  say, "unelected bureaucrats."  The EPC has so far escaped the attention of the European Research Group and sympathetic journalists.  The EPC is not an EU treaty, but the EPO does work with the EU. Every EU member state is party to the EPC. Both the unitary patent and its proposed predecessors, the EU and Community patents would have been European patents issued by the EPO.  Decisions by examiners and Boards of Appeal most of whom will not be British citizens can have far-reaching consequences for the UK. I wonder how long it will take for this inconvenient truth to dawn on Eurosceptics.

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